Capital One, USPS in NSA dispute

The Postal Regulatory Commission may rule in August on the dispute between Capital One Services Inc. and the US Postal Service, regarding the issu­ance of a contract between the USPS and the mailer that would provide customized pricing incentives.

Capital One filed a complaint about the negotiated service agreement (NSA) with the PRC on June 19, alleging that the Postal Service “unduly discrimi­nated” against the company because it was denied a NSA under the same terms as one granted to its competitor, Bank of America Corp.

Terms of the Bank of America NSA, which went into effect April 1, required multiple operational commitments from the company, including implementing the Intelligent Mail barcode and other auto­mated sorting tools, as well as waiving the physical return of certain First Class Mail and Standard Mail pieces.

The USPS claims that Capital One's proposed NSA was not identical to that of Bank of America, and that Capital One had not exhausted all good faith negotiations for an NSA before filing the complaint.

The USPS filed a motion to dismiss Capital One's complaint on July 21. In it, the agency claims, “No [PRC] precedent supports Capital One's position that the USPS' unwillingness to offer Capi­tal One an NSA with identical terms, thresholds and discounts as those in the Bank of America NSA constitutes an unwillingness to negotiate a functionally equivalent NSA.”

A Capital One spokesman declined to comment beyond the company's com­plaint filing, which states that the company was denied a NSA that was “functionally equivalent” to that of Bank of America.

“The USPS' refusal to offer an equivalent NSA to Capital One confers a significant competitive advantage to Bank of America and puts Capital One at a distinct competi­tive disadvantage,” the complaint reads.

Capital One further alleges that the NSA between Bank of America and the USPS used thresholds for mailing dis­counts based on industry rates from 1998, rather than current NSA baselines.

Ann Fisher, acting director of public affairs and government relations for the PRC, said the commission has until Sep­tember 16 to make a decision. She said the decision may be made before that deadline. After a decision is made, either party can appeal the decision.

The USPS has approved a total of nine NSAs, with one extension, since the opportunity began in 2002. Capital One received the first NSA, which was approved, in May 2003. The agreement granted the bank a discount rate on mail volume above an annual total of 1.225 billion pieces for a three-year term. The USPS receives between 50 and 100 requests for NSAs each year, according to a USPS spokesman.